The government’s latest Intergenerational Report issued by Treasurer Joe Hockey has confirmed what we were already thinking: we have an ageing population and we need to change our current ways in order to support future Australia.
The Report, issued every five years, is designed to provide a guide as to what Australia might look like 40 years from now.
Whilst reading the report, there was one table that caught my eye: the male life expectancy and age pension age.
I hate to be the pessimist here, but it seems that Australia not only has an ageing population, but we’re living longer too.
Chart 2.15 (pictured) of the Report shows that the gap between life expectancy and age pension is growing; so much so that the life expectancy will reach 88 years for men (currently 80.7) and 90.5 years (currently 84.8) for females.
Life expectancy will be even higher if improvements in health and new health technologies are taken into account.
This means that men will need to save (i.e. work) seven years more than originally expected, and women five years if they plan on leading a comfortable retirement.
My pessimism branches from another jaw-dropping statistic in the Report. It said that by 2055, Government debt under current legislation would be 60 per cent of GDP. To pull it back into perspective, at present the Government is currently spending $100 million per day more than what it collects in tax.
My point is that yes we are lucky enough as a Nation to rely on the Government for our retirement pension – but that doesn’t mean we should.
More disturbing stats feeding my pessimism come from a report commissioned by HSBC earlier this year, titled ‘The Future of Retirement: A balancing act’.
It too provided insights into the issues associated with ageing populations, increasing life expectancy and retirement around the world.
Ipsos MORI carried out the survey of 16,000 people in 15 countries, including people who had already retired as well as those of working age.
It revealed that retirement is not the main savings priority for a staggering 85 per cent of working age people.
And what’s worse, is that Australian’s are the third most undisciplined when it comes to this mentality!
The decision not to save specifically for retirement is most common in Turkey (59%), Brazil (53%) and Australia (53%), where over half of working age people are not putting money aside for later life.
I really thought we as a nation were taking control of this issue.
I cannot stress how important it is to plan for your retirement. Intent alone is just, not, enough. You need to start getting those thoughts on paper, making plans for the future and putting actions in place to ensure you end up where you want to.
Don’t end up like the two thirds (65%) of retirees who only realised they didn’t have enough for a comfortable retirement until they actually retired…
It is never too late to start investing in property to lay the foundations for your wealth creation and to fund your retirement. Talk to me today on 1800 600 890 to find out how we can help you secure your financial future.